Farm Subsidies . . . or Nonsensical Giveaways

September 16th, 2010 | Simcha Weinstein | Comments Off on Farm Subsidies . . . or Nonsensical Giveaways

In January I wrote an article about the cost of organic food – why organic tends to be more costly at the register than conventionally grown food. I covered several different points that are pretty standard when discussing this issue: the added administrative costs for intensive record keeping; how chemical fertilizers allow conventional farmers to plant every square inch of farmland with their cash crops instead of crop rotation; and how using chemical fertilizers and sewage sludge is much less costly than compost and animal manure. What I wanted to go into in a little more depth with this article is what is perhaps the main reason that organic food costs more than conventional food – and that’s farm subsidies. As an example, in 2009 U.S. farm subsidies topped 15.4 billion with only $15 million going to programs for organic and local foods. The gap is enormous. If you are doing some quick math in your head, that’s over one thousand times more money to conventional farming than to organic programs. Farm subsidies have cost taxpayers more than $245.2 billion since 1995, according to the Environmental Working Group.

Over three quarters of the subsidies go to corn, wheat, cotton and rice. The corn subsidies create an unnaturally low price for farm animals (very cheap feed), which makes the price of raising conventional meat much lower than with organic. Organic meat and dairy products are at a huge disadvantage when competing with the price of the same conventionally raised products. This regular practice of enormous subsidies to conventional farming has created an artificially low cost for much of our food that would surely go up significantly in price (much closer to where organic food is) if the subsidies were not available.

Farm subsidies do not really benefit the small farmer at all. In 2002 (a few years ago for sure, but it will demonstrate this point nonetheless) 71% of farm subsidies went to the top 10% of beneficiaries, which in most cases were large farms. The top 20% received over a million dollars each, compared to an average of $846 annually received by the bottom 80%. To this day, the numbers have grown, but the disproportionate allocations remain about the same. Subsidies are typically awarded based on the volume of production, which can often force small farmers to “overproduce”, so they can receive a higher benefit.

And this from the Washington Post:

Between 2001 and 2006, at least $1.3 billion was paid to landowners who had planted nothing since 2000. The Washington Post reported that among the beneficiaries were homeowners in new developments whose backyards used to be rice fields.

Direct payments, which date back to 1996 and now make up nearly half of the country’s agricultural subsidy system, were meant to act as a trial run toward eventually getting rid of costly farm subsidies altogether. But the payments have grown into an even larger subsidy of their own, The Post found.

A Post reporter describes it: direct payments are based on the farmer’s record of planting specific crops prior to 1996. “That established his ‘base acres,’ which qualify him for direct payments that are, in effect, like a second social security check.”

The politics of our food system need a radical overhaul. Providing the most benefits to those who need it the least, and creating no safety net for the small family farm makes no sense at all. Ending direct payments would certainly help level the playing field for small farmers everywhere.